CEBS – Achievements to date Kerstin af Jochnick | 17 May 2005

CEBS | May Outline Introduction What is CEBS? –Role and tasks –Lamfalussy framework Consultation Work Programme 2005 – Supervisory Review Process (Pillar II) – Reporting requirements – Supervisory Disclosure Supervisory Disclosure

CEBS | May Introduction Basel II and CEBS –The new paradigm: risk-focused supervision –A window of opportunity for convergence in supervisory practices in the EU: the role of CEBS Four main challenges in EU implementation –Consistent implementation –Convergence in supervisory practices –Streamlining the supervisory process for cross-border groups –Effective consultations

CEBS | May Role and tasks established in Nov 2003, the first meeting Jan 2004 high level representatives from the banking supervisory authorities and central banks of the European Union, including the European Central Bank 25 countries and 46 member organisations, observers from EEA* countries, the European Commission and the Banking Supervision Committee of ESCB (European System for Central Banks) Chairman Vice Chair Secretary General José María RoldánDanièle Nouy Andrea Enria Banco de EspañaCommission de BancaireBanca d’Italia * Iceland, Liechtenstein and Norway

CEBS | May Role and tasks to advise the European Commission on banking policy issues, in particular for the preparation of draft measures for the implementation of European legislation to foster a common day to day implementation and application of Community legislation by issuing guidelines, recommendations and standards to promote supervisory co-operation and provide for the exchange of supervisory information

CEBS | May Lamfalussy framework EBC¹ CommissionParliament EIOPC¹ESC¹FCC¹ Enforcement Commission Council CEIOPS³CESR³ L1 L2 L3 L4 CEBS² EBC = European Banking Committee EIOPC = European Insurance and Occupational Pensions Committee ESC = European Securities Committee FCC = Financial Conglomerates Committee CEIOPS = Committee of European Insurance and Occupational Pensions Supervisors CESR = Committee of European Securities Regulators ¹ Finance ministries ² Supervisors and Central Banks ³ Supervisors Legislation Implementing details Convergence

CEBS | May Accountability EBC¹ CEBS² CEIOPS 3 CESR 3 ¹Finance ministries ²Supervisors and Central Banks ³Supervisors ECOFIN Council EBC European Banking Committee EFC Economic and Financial Committee FSC Financial Services Committee FST Financial Stability Table CEIOPS Committee of European Insurance and Occupational Pensions Supervisors CESR Committee of European Securities Regulators European Commission European Parliament FSC¹ European Central Bank (ECB) EFC-FST¹Economic and Monetary Affairs Committee (ECON) Banking Supervision Committee (BSC) Level-3 coordination Advice/ accountability Cooperation

CEBS | May Expert groups Members of the Bureau: José María Roldán Danièle Nouy Helmut Bauer Andreas Ittner Kerstin af Jochnick Andrea Enria

CEBS | May Consultation Consultation with the industry, market participants and end-users Objectives: transparency, benefit from expertise of market participants and end-users, dialogue and interaction Tools: public consultation on CEBS products, hearings, panel Consultative Panel composed of 19 members with main task of acting as a sounding board in strategic issues Standards, guidelines and recommendations The industry, market participants and end-users CEBS

CEBS | May Consultative Panel Expresses views on CEBS’ work programme; Comments on the way in which CEBS is exercising its role and, in particular, on the adequacy of consultation with market actors, consumers and end-users; Assists CEBS in setting priorities; Alerts CEBS to regulatory inconsistencies in the Single Market and suggests areas for Level-3 work; Informs CEBS on major financial market developments.

CEBS | May Consultative Panel Freddy van den Spiegel, Fortis (The Chair) Hugo Banziger, Deutsche Bank Albertus Bruggink, EBIC (Rabobank) Riccardo de Lisa, FIN-USE Richard Desmond, UNICE Richard Gossage, Royal Bank of Scotland Carl-Johan Granvik, Nordea Siegfried Jaschinski, State Bank of Baden-Württemberg Benoît Jolivet, FIN-USE Michael Kemmer, EBIC (HVB Group) Roman Maszczyk, PKO BP SA José Maria Méndez, Spanish Federation of Savings Banks João Salgueiro, Portuguese Banking Association Frédéric Oudea, Societe Generale Herbert Pichler, Austrian Federal Economic Chamber Franco Spinelli, Banca Bipop Carire Antimos Thomopoulos, National Bank of Greece Manfred Westphal, BEUC Klaus Willerslev-Olsen, Danish Bankers Association

CEBS | May Work Programme 2005 Priority areas of work Regulatory advice to the Commission Cross-border mergers in banking Deposit guarantee schemes Own funds E-money Convergence of supervisory practice Supervisory Review Process (Pillar 2) Validation of IRB and AMA systems External Credit Assessment Institutions (ECAIs) Harmonisation of reporting requirements Supervisory disclosure Co-operation and information exchange Supervision of cross-border groups (home-host) Crisis management (joint with the BSC) Information exchange Other areas of work Risks to banking stability Outsourcing Internal governance Impact of IFRS on prudential requirements The role of the audit function for prudential supervision Cross-sectoral issues: Supervision of financial conglomerates Off-shore financial centres Delivered products National discretions (work continues 2005) Prudential filters

CEBS | May Supervisory Review Process Objectives of Pillar 2 are to: Ensure institutions have adequate capital to support all risks in their business Encourage institutions to manage risk Foster an active dialogue between institutions and supervisors Covers the relationship between: –Supervisor’s SREP (the Supervisory Review and Evaluation Process); and –Institution’ ICAAP (the Internal Capital Adequacy Assessment Process).

CEBS | May Supervisory Review Process The first consultation on Pillar 2 finished in August 2004 In general, responses very positive Industry supported the main concepts: –ICAAP the responsibility of the institution –Dialogue between the institution and the supervisory authority in the ICAAP/SREP process –Proportionality Second round of consultation in Q2 2005

CEBS | May Supervisory Review Process

CEBS | May Work Programme 2005 Priority areas of work Regulatory advice to the Commission Cross-border mergers in banking E-money Deposit guarantee schemes Own funds Convergence of supervisory practice Supervisory Review Process (Pillar 2) Validation of IRB and AMA systems External Credit Assessment Institutions (ECAIs) Harmonisation of reporting requirements Supervisory disclosure Co-operation and information exchange Supervision of cross-border groups (home-host) Crisis management (joint with the BSC) Information exchange Other areas of work Risks to banking stability Outsourcing Internal governance Impact of IFRS on prudential requirements The role of the audit function for prudential supervision Cross-sectoral issues: Supervision of financial conglomerates Off-shore financial centres Delivered products National discretions (work continues 2005) Prudential filters

CEBS | May Supervisory Disclosure Supervisors are required to publish (CRD Art. 144): –Rules and guidance –How options and national discretions are exercised –Supervisory review and evaluation –Statistical data on national banking sectors Easy access and meaningful comparison  peer group pressure –Internet access via CEBS website –Links to national websites –Comparable information –Common language - English

CEBS | May Consistent implementation - Supervisory Disclosure

CEBS | May Consistent implementation - Supervisory Disclosure

CEBS | May Consistent implementation - Supervisory Disclosure

CEBS | May Work Programme 2005 Priority areas of work Regulatory advice to the Commission Cross-border mergers in banking E-money Deposit guarantee schemes Own funds Convergence of supervisory practice Supervisory Review Process (Pillar 2) Validation of IRB and AMA systems External Credit Assessment Institutions (ECAIs) Harmonisation of reporting requirements Supervisory disclosure Co-operation and information exchange Supervision of cross-border groups (home-host) Crisis management (joint with the BSC) Information exchange Other areas of work Risks to banking stability Outsourcing Internal governance Impact of IFRS on prudential requirements The role of the audit function for prudential supervision Cross-sectoral issues: Supervision of financial conglomerates Off-shore financial centres Delivered products National discretions (work continues 2005) Prudential filters

CEBS | May Future Work Next steps on consistent implementation and convergence of practices: Compendium or guidebook of standards, guidelines, advice and other work of CEBS For supervisors and market participants Flexible, internet based structure, easy to update Consistent terminology, definitions Common European “rules and guidance”

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